My first beer was Stroh's:
In August 1989 the Stroh Brewery Co. was in retreat. The company that had treated employees like family laid off 300 people, one-fifth of its white-collar workforce. “I had to let go four of the five people in the marketing research department. It was heartbreaking,” remembers Ed Benfield, former director of market research at Stroh.
The next month Peter Stroh, who died in 2002, agreed to sell the family business to Coors for $425 million. But Coors got cold feet and pulled out of the deal a few months later. “It had something to do with due diligence, and Bill Coors,” says Benjamin Steinman, longtime editor of newsletter Beer Marketer’s Insights. “There were lots of stories.”
Desperate, Peter Stroh brought in renowned adman Hal Riney to give the Stroh’s brand a more upscale look and position. The cherished Stroh signature gave way to block print, prices were raised, and the 15- and 30-packs were nixed. It could not have been a worse decision. But since the product hadn’t changed, customers could do the math: Sales of Stroh’s-brand beer fell more than 40% in one year, “the biggest drop in sales in the history of beer,” says Benfield.
If you went to college in the 1980s (I was in college from 1981 to 1989) you remember Schaefer, Schlitz and Old Milwaukee. Stroh's owned them all in an attempt to compete with Budweiser and Miller. That didn't work so the final solution is to raise price and reduce quantity, while keeping quality constant. Put that question on your micro exam this fall and see how many college sophomores can predict the outcome. My guess, they'll wonder why the goofy professor put such an easy question on the exam.
Hat tip: Newmark's Door